Beeline Holdings: Navigating a Changing Financial Landscape

Beeline Holdings, Inc. is a diversified financial services company with two main business segments - Beeline, a direct-to-consumer mortgage lender, and Bridgetown Spirits, a manufacturer and marketer of alcoholic beverages. The company recently underwent a major merger and restructuring, which has significantly impacted its financial performance and reporting.

Overview of the Merger and Restructuring

In October 2024, Eastside Distilling, Inc. (the previous parent company) merged with Beeline Financial Holdings, Inc. to form the new Beeline Holdings, Inc. As part of this transaction, Eastside also entered into a Debt Exchange Agreement, which resulted in the deconsolidation of its Craft Canning + Printing subsidiary.

The consolidated financial statements now include the results of Beeline, Bridgetown Spirits, and various other subsidiaries related to title services, mortgage lending, and data/technology services. This merger and restructuring makes it difficult to directly compare the company’s 2024 financial results to the prior year, as the 2023 figures primarily reflected the performance of the Bridgetown Spirits business.

Financial Performance in 2024

For the full year 2024, Beeline Holdings reported total revenue of $3.8 million, which was consistent with the prior year’s revenue. However, the company recorded a net loss of $13.1 million in 2024, compared to a net loss of $7.5 million in 2023.

The increase in net loss was driven by several factors:

• Inclusion of Beeline’s results of operations from October 8, 2024 through December 31, 2024, which contributed a $2.0 million net loss.
• An impairment loss of $3.4 million related to the write-down of certain assets in the Spirits business.
• Increased professional fees and other expenses.

These losses were partially offset by a $4.5 million gain on the troubled debt restructuring associated with the Debt Exchange Agreement.

Segment Performance

To provide more meaningful analysis, Beeline Holdings reports financial results by operating segment:

Beeline (October 8, 2024 - December 31, 2024)

• Originated $57 million in residential mortgage loans
• Reported a net loss of $2.0 million, primarily due to high operating expenses relative to revenue

Bridgetown Spirits

• Net sales declined 32% to $2.6 million, driven by lower bulk spirits sales and overall volume
• Gross profit margin decreased from 31% to 19% due to the sales decline
• Recorded a $3.4 million impairment loss related to its Azuñia assets

Corporate

• Incurred $3.3 million in operating expenses, including $1.4 million in salaries and benefits and $1.0 million in professional fees
• Recognized a $4.5 million gain on troubled debt restructuring and a $0.6 million gain on extinguishment of debt

The divergent performance of the two main business segments highlights the challenges Beeline Holdings faces in managing its diverse operations. Beeline’s mortgage lending activities struggled with higher costs and lower volumes, while Bridgetown Spirits continued to face headwinds in its core spirits business.

Liquidity and Capital Resources

As of March 31, 2025, Beeline Holdings had $1.4 million in cash on hand. However, the company does not have sufficient cash resources to meet its working capital needs and debt obligations for the next 12 months.

To address its liquidity needs, Beeline Holdings has taken the following actions:

• Entered into a $10 million common stock purchase agreement in December 2024, of which $2.1 million has been drawn as of March 2025.
• Sold $3.3 million in Series G Preferred Stock and warrants during the first quarter of 2025.

The company’s ability to meet its near-term operating cash needs will depend on its success in securing additional debt and/or equity financing. There is no assurance that Beeline Holdings will be able to raise the necessary capital on favorable terms, or at all.

Key Accounting Policies and Estimates

The company’s critical accounting policies and estimates relate to the following areas:

Mortgage Loans Held for Sale and Gain on Sale of Loans

• Mortgage loans held for sale are carried at fair value, with changes in fair value recorded as gains or losses on the sale of loans.
• Gain on sale of loans includes the premium received from investors, loan origination fees, and the realized/unrealized gains/losses on derivative instruments.

Revenue Recognition

• Beeline recognizes revenue from gain on sale of loans, title fees, loan origination fees, and interest income.
• Bridgetown Spirits recognizes revenue from product sales, less excise taxes and customer programs/incentives.

Goodwill and Intangible Assets

• The company tests goodwill for impairment annually or when indicators of potential impairment exist.
• Intangible assets are reviewed for impairment whenever events or circumstances indicate the carrying amount may not be recoverable.

Troubled Debt Restructuring

• The Debt Exchange Agreement was accounted for as a troubled debt restructuring, resulting in a $4.5 million gain.

These critical accounting policies and estimates have a significant impact on the company’s reported financial results and require management to make complex judgments and assumptions.

Outlook and Challenges

Beeline Holdings faces several key challenges as it navigates the evolving financial services landscape:

Beeline Mortgage Lending

• Mortgage origination volumes have been volatile, driven by fluctuations in interest rates and economic conditions.
• The company must continue investing in technology and automation to enhance the customer experience and improve operational efficiency.
• Maintaining strong liquidity and access to capital will be crucial to support Beeline’s growth.

Bridgetown Spirits

• The spirits industry is highly competitive and regulated, requiring Bridgetown to optimize its distribution and sales strategies.
• The business has struggled with declining sales volumes and profitability, leading to significant impairment charges.
• Bridgetown must focus on streamlining operations, reducing costs, and developing stronger brand recognition to return to sustainable growth.

Overall Liquidity

• Beeline Holdings does not currently have sufficient cash resources to meet its working capital and debt obligations over the next 12 months.
• The company’s ability to secure additional financing, whether through debt or equity, will be critical to its near-term survival and long-term success.

As Beeline Holdings navigates these challenges, it will need to make difficult decisions to allocate capital, streamline operations, and position its diverse businesses for sustainable growth. The company’s future performance will depend on its ability to execute its strategic initiatives while maintaining strong financial discipline.